Investing with an LGBTQ+ Lens
Sustainable and impact investors often pursue investment strategies that seek to close disparities and improve diversity, equity and inclusion (DEI) across a variety of dimensions. A growing evidence base has identified a link between more diverse companies and a greater economic upside, whether through improved decision-making on teams, financial performance or employee retention.1,2,3 As DEI strategies proliferate, investors are increasingly able to allocate capital to strategies adopting an “intersectional” approach that uses investing to address various forms of inequality across gender, race, sexual orientation, socioeconomic background and citizen status, understanding that these forms of inequality can overlap and create compounding experiences of oppression.4
Against this backdrop, we explore frameworks for investing with a lesbian, gay, bisexual, transgender, queer and intersex (LGBTQ+) lens as one way investors can address the inequities — and challenges — faced by members of this community.
Why invest with an LGBTQ+ lens?
Incorporating an LGBTQ+ lens increases investors’ ability to understand how and where sexual orientation and expressions of gender identity are material to investment decision-making.5 But the impact of applying this lens goes beyond that, shining a spotlight on issues such as LGBTQ+ rights, equality and representation in leadership and underscoring continued discrimination against those who identify as LGBTQ+ in the workplace. As of 2023, 25 states plus the District of Columbia lack explicit laws protecting people from discrimination on the basis of sexual orientation or gender identity in employment, housing and public accommodations.6 The statistics can be especially grim in the workplace, where nearly 1 in 2 LGBTQ+ employees say they remain closeted at work, 1 in 5 have stayed home from work because the workplace was not accepting, and 1 in 10 left a job because of an unwelcoming environment.7
Is there a way to identify companies that support LGBTQ+ values? And exclude companies that do not?
Many companies offer inclusive workplace policies and practices that support LGBTQ+ individuals. When reviewing a particular company as a possible investment, investors might consider several positive and negative screens. For example, does the company provide transgender-inclusive healthcare benefit policies or domestic partner medical benefits? Conversely, does the company express overt anti-LGBTQ+ policies?
It is possible to tilt toward companies with pro-LGBTQ+ policies and practices, based on the Human Rights Campaign (HRC) Foundation Corporate Equality Index, a national benchmarking tool on corporate policies, practices and benefits pertinent to LGBTQ+ employees. This index evaluates corporations that illustrate an organizational LGBTQ+ competency and that commit publicly to the LGBTQ+ community, assessing if, for example, the company includes sexual orientation and gender identity as protected classes in its U.S. nondiscrimination policy or offers domestic partner benefits and transgender inclusive benefits.
Investors may also seek companies demonstrating:
- Evidence of human rights in the supply chain and workplace equity.
- Workplace policies and practices that go beyond one set of assumptions about heterosexual partnerships (i.e., motherhood, adoption, primary domestic caregivers) to support a full range of gender expressions and identities.
- Organizational LGBTQ+ diversity competencies that include employee resource groups or diversity councils with LGBTQ+ and allied employees and programming.
- Adoption of gender transition guidelines to establish best practices around transgender inclusion for managers and teams.
- Provision of equal benefits for same sex couples, regardless of marriage.
Negative screens might include companies that have criminalized LGBTQ+ expression, donated to lawmakers who advance anti-LBGTQ+ bills (e.g., antitransgender legislation) or that do not include LGBTQ+ protections within their labor rights policies.
A key tool for LGBTQ+ investors is identifying strategies that offer shareholder engagement. Using one’s shares to engage companies on LGBTQ+ issues can be impactful. Strategies investing with an LGBTQ+ lens may couple their investment approach with stewardship activity, for example, requesting that a company publish pay equity reporting, conduct a human rights audit or expand healthcare coverage.
Are there funds that support LGBTQ+ values?
Yes. Funds that invest with a LGBTQ+ lens may approach diversity along three dimensions: 1) access to capital, 2) workplace equity and 3) products and services. These strategies may be thematically focused on dimensions of DEI or may include a focus on LGBTQ+ rights
and representation as part of a broader approach to sustainable and impact investing.
How can impact be measured?
Though frameworks for LGBTQ+ investing are still evolving, there are several proxies to use to measure impact, including:
- Average HRC score. The HRC Foundation’s Corporate Equality Index (CEI) is a tool that shows the number of employers committed to implementing policies and practices that are LGBTQ+ inclusive. The average CEI score for all Fortune 500 companies in 2022 was 76%, but 94% among those that actively participated in the CEI 2022 survey. The survey ranked categories such as domestic partner benefits, organizational LGBTQ+ competency and public commitment to the LGBTQ+ community.8
- Exposure to human rights controversies. It can be challenging to understand how, and to what extent, companies manage their impact on people. A survey of PRI signatories9 suggests that particular focus is needed on several categories of information, including companies’ inherent human rights risks and the quality of human rights due diligence.10 It is important to have the data necessary to incentivize companies to implement effective risk management processes.
- Companies offering a living wage. The HRC found that LGBTQ+ workers earn 90 cents for every dollar that the typical worker earns, with LGBTQ+ people of color, transgender women and men, and nonbinary individuals earning even less.11 Investors can screen out companies that pay only subminimum wages and tilt toward companies providing fair compensation.
- Expanded benefits. Look for companies expanding benefits to same-sex couples and single-parent households as they would to married couples, for example, offering parental leave to a caretaker.
For information on solutions that seek to invest with an LGBTQ+ lens, please reach out to us at SustainableAndImpactInvesting@glenmede.com.
1 Morgan Stanley. “Does Ethnic Diversity on Corporate Boards Affect Stock Prices?” January 5, 2022.
2 McKinsey, “Diversity Wins: How Inclusion Matters.” May 19, 2020.
3 Harvard Business Review. “Why Diverse Teams are Smarter.” November 4, 2016.
4 UN Women. “Intersectional Feminism: What It Means and Why It Matters.” July 2020. https://www.unwomen.org/en/news/stories/2020/6/explainer-
5 Subramanian, T., et al. “Investing with an LGBTQI Lens.” Criterion Institute, June 2020. https://criterioninstitute.org/wp-content/uploads/LGBTIQ-Report-
6 Nondiscrimination Laws. Movement Advancement Project. https://www.lgbtmap.org/equality-maps/non_discrimination_laws.
7 “A Workplace Divided: Understanding the Climate for LGBTQ Workers Nationwide.” Human Rights Campaign Foundation. https://hrc-prod-requests.s3-us-
west-2.amazonaws.com/files/assets/resources/AWorkplaceDivided-2018.pdf. (accessed March 13, 2023)
8 Corporate Equality Index 2022. Human Rights Campaign. https://www.hrc.org/resources/corporate-equality-index.
9 The United Nations-supported Principles for Responsible Investment (PRI) is a network of global investors committed to integrating ESG factors into their
investment practices to develop a more sustainable financial system.
10 “What Data Do Investors Need to Manage Human Rights Risk?” Principles for Responsible Investment, November 29, 2022. https://www.unpri.org/human-
11 “The Wage Gap Among LGBTQ Workers in the United States.” Human Rights Campaign. https://www.hrc.org/resources/the-wage-gap-among-lgbtq-workers-
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